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Chuck Carnevale

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  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    midhenry,

    With all due respect I understand the definition of the P/E ratio. In fact I have written numerous articles discussing its relevance as a valuation tool. Including this white paper that you might find illuminating:

    http://bit.ly/1hRuqj3

    Therefore, I humbly submit that I understand the metric and its definition. However, it the context of this discussion, the P/E ratio is one component of the formula I utilized, the other is the respective companies I presented earnings growth rates. Two parts to the formula part one the P/E ratio and part two the earnings growth rate.

    The point you are missing is that the formula graphed the slope of each companies earnings growth. For example the utilities had a very flat earnings line and the fast growers a very steep growth rate line. But the P/E itself was not relevant to the point, nor is its definition.

    However, as an interesting aside the formula P/E= Earnings growth rate(again two parts) is a valuation formula made famous by legendary investor Peter Lynch as a valuation calculation for high growth companies. But as I previously stated the formula was not used in that context in this article. Instead it was used to graph the slope of the earnings growth of the company examples used in my article.

    I hope this clarifies things for you,

    Chuck
    Apr 17 08:59 PM | 2 Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    BalancedInvestor,

    Thanks. Some stocks historically command a quality premium and some are simply priced too high. Personally, I never try to guess when or if high valuation will correct itself, I simply move on when I feel I see it and look for something else that is at good value. I often check back on overvalued stocks where I like the company, but I rarely capitulate on fair value. I take it when I get it, if I get it.

    Regards,

    Chuck
    Apr 17 03:55 PM | 1 Like Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Shane,

    Thanks I did not take anything negative from your first comment, I was just reiterating what I wrote about. Its all good.


    Chuck
    Apr 17 03:50 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Shane,

    Thanks for sharing your views. This article is about awareness of what is available and the potential risks and rewards of each and the source of such. No recommendations were implied.

    Regards,

    Chuck
    Apr 17 03:36 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    midhenry,

    The formula that I used to draw the orange earnings line on the examples in this particular article were drawn using PE = Earnings growth rate. Therefore, the slope of the orange lines in this article is the growth rate of each respective company. So yes really.

    The point is to illustrate the differences in the historical operating results(growth rates) of each of the six categories and nothing more. If you are reading anything more into it you are misunderstanding the point. Perhaps I am misunderstanding yours? Care to elaborate?

    Regards,

    Chuck
    Apr 17 03:34 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    ronster9,

    Thanks, this part one of this series was all about awareness of the options available. Regarding your last statement, I learned a long time ago that one of the best ways to learn is to teach. Consequently, although I appreciate the sentiment, I am simultaneously the beneficiary of what I do.

    Thanks again,

    Chuck
    Apr 17 02:09 PM | 1 Like Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Allan j.,

    Thanks for sharing that comment. I think you expressed the potential value of investing in an asset play quite nicely. However, I think you simultaneously revealed the extreme patience that is required to harvest that potential. As I said in the article, not all of the six categories are appropriate for everyone. On the other hand, if you understand the risks and rewards they can all be profitable, especially if you have the patience.

    Regards,

    Chuck
    Apr 17 02:06 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    AfgTrader1 and mike shannon,

    Thanks for the kind words. I hope to have part two ready by early next week.

    Regards,

    Chuck
    Apr 17 02:02 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Mike,

    Thanks for the kind words. Part two will be my favorite part because valuation is my favorite subject to write about.

    Regards,

    Chuck
    Apr 17 02:00 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    thetroubledinvestor,

    Thanks for the kind words, and for sharing your views. Frankly, asset plays are not the only category of the six that I tend to avoid. However, there are exceptions to every rule. Personally, I have never actually invested in “a pure asset play”, however, as I pointed out the article there can be profit opportunities in each of the six categories, there are also significantly different levels of risk. My primary objective for this series was to increase awareness of the available options, but not necessarily to support or reject any of them.

    Thanks again,

    Chuck
    Apr 17 01:59 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Keeper7,

    Thanks for the kind words; it’s very gratifying to learn that you found the article useful.

    Regards,

    Chuck
    Apr 17 01:55 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Dave,

    You are too kind. As a boy that was raised in Pennsylvania known as the Keystone state, part two of this series on VALUATION will of course represent the keystone of this series. I carry the title of Mr. Valuation that you so kindly bestowed upon me with great pride and honor. I am already well in the part two, because there is nothing that I would ever want to do to cause you any harm…;0)..

    Thanks again,

    Chuck
    Apr 17 01:54 PM | 1 Like Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    alschroed,

    Thanks for sharing your views on Wal-Mart. My calculations indicate slightly higher growth rates for both dividends and earnings. However, it would depend on what time frame we are measuring. Consensus estimates provided by analysts reporting to Standard & Poor’s capital IQ are forecasting future growth of 8% to 9% long-term. Nevertheless, I believe it is the responsibility of all investors on all companies to do their own due diligence. Personally, I believe forecasting future earnings are the key to long-term success. But, I also recognize that it is a difficult task and not one that can be expected to always be calculated precisely.

    But most importantly, I want to again state that none of the companies in this article were offered as recommendations. Instead, they were offered as representative examples that have historically possessed the characteristics in order to be placed in one of the six categories that Peter Lynch discussed in his book.

    Regards,

    Chuck
    Apr 17 01:49 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Bill,

    Thanks for the kind words. I am looking forward to writing part two because it covers my favorite subject- valuation.

    Thanks again,

    Chuck
    Apr 17 01:43 PM | Likes Like |Link to Comment
  • Constructing And Designing The Stock Portfolio That's Just Right For You: Part 1 [View article]
    Uain53,

    Thanks for the kind words. Regarding your suggestion about when to sell- it is a good one, and I will see what I can do. But, I do have to finish this series before I consider moving on to something else.

    However, I will add here that I favor making both buy and sell decisions based on fundamental value. Moreover, I also favor holding on for the long run and being willing to ride out the occasional peaks and valleys that come along. In other words, as Warren Buffett once said “inactivity strikes us as intelligent behavior.” On the other hand, there can be valid reasons to sell a position to move into another.

    Thanks again,

    Chuck
    Apr 17 01:42 PM | 1 Like Like |Link to Comment
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